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June 2013

June 30, 2013

Jun. 30, 2013 (Allthingsforex.com)
– In the holiday-shortened week ahead, traders will watch the next
moves by the European Central Bank and the Bank of England, while
gauging the odds of “tapering” of the Fed’s asset purchases based on the
outcome of the U.S. Non-Farm Payrolls.

In preparation for the new trading week, here is the outlook for the
Top 10 spotlight economic events that will move the markets around the
globe.

Despite of the index rising in recent months, the chronic contraction
in the euro-zone manufacturing sector is likely to continue. The final
reading of the Manufacturing Purchasing Managers Index is forecast to be
confirmed at 48.7 in June, still below the 50 boom/bust line.

Manufacturing activity in the U.S. slowed down and the index
unexpectedly dropped in contraction territory to 49.0 in May, but we
could see the sector gaining traction in June with the index climbing
back above 50 to 50.6 in June.

There was a recent shift in leadership with the Australian Prime
Minister replaced by the previous one. The data in the last few months
has shown the country’s largest trading partner China slowing, liquidity
concerns rising, the mining boom peaking and the “two-speed” Australian
economy underperforming. All of this creates an environment in which
the Reserve Bank of Australia could be forced to announce another 25 bps
rate cut, maybe not at this meeting but sometime in the near future.
The Aussie dollar has fallen significantly since the last meeting and
could stay under pressure if the central bank makes it clear that policy
makers are still willing to ease monetary policy further.

The final reading is expected to be in line with the preliminary
estimate which showed activity in the euro-zone services sector inching
higher to 48.6 in June from 47.2 in May. Despite of the anticipated
increase, the index will be likely to remain below the 50 boom/bust line
for yet another month of contraction.

5. USD- U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., Jul. 3, 8:15 am, ET.

Following the unexpected decline to 135K in May, the U.S. private
sector is forecast to pick up the pace of job creation with up to 160K
jobs added in June. The report could set the tone for an upbeat non-farm
payrolls report on Friday.

Reaching its weakest level in nine months with a drop to 53.1 in
April, activity in the U.S. services sector bounced higher to 53.7 in
May and the index is forecast to continue to climb to 54.3 in June.

In the first quarter of the year, the euro-zone economy was unable to
return to growth and the final reading is forecast to confirm that the
economy contracted by 0.2% q/q, prolonging the recession for a third
consecutive quarter. With no end to its recessionary period and not much
optimism that the economy might be turning a corner in the near future,
the EUR could be pushed lower on expectations of additional easing by
the European Central Bank.

The first meeting with the new Bank of England Governor Mark Carney
in charge is not very likely to bring any sudden changes in the central
bank’s monetary policy course. Recent data from the U.K. has shown signs
of improvement and there is no need for policy makers to rush to
increase the size of the Asset Purchase Program. With the bank expected
to start offering forward guidance, future QE expansion will be
dependent on the state of the U.K. economy. As long as the Bank of
England remains on the QE sidelines, the pound should remain as a viable
alternative to currencies whose central banks are committed to
aggressive monetary policy easing.

Conditions in Germany may be getting better in the last few months,
but unfortunately, the 17-nation euro-zone is still struggling with
record high unemployment and a prolonged recession. In this economic
backdrop, the European Central Bank is not going to be willing to
tighten monetary policy. Moreover, in an effort to spur economic growth,
the ECB might need to consider additional unconventional monetary
policy easing measures. The USD could find further strength against the
EUR as the Fed gets ready to take the first step towards monetary policy
tightening while the European Central Bank remains in an easing mode.

The U.S. labor market could continue its current trend with the
economy adding up to 165K jobs in June compared with 175K in May, while
the unemployment rate inches lower from 7.6% to 7.5%. A decent NFP
report will raise the odds that the Fed could reduce the size of its
monthly asset purchases sooner than expected and could give the USD a
boost.

June 29, 2013

Last week I wrote: "Correction wave 2 was finished on Tuesday. Thursday the 50 day
average support was broken as expected. The down move was stopped on
Friday reaching the dynamic support of the 100 day average, the S1 pivot
support and the low side of the BBS volatility band. The expert turned
black on Thursday. We have a valid wave 3.2 down. The Fibonacci target
for the wave 3.2 down is 1563. There may be some reaction before we
reach that point. For the medium term 1500 is the next target".

What I said last week: "We have a valid wave 3.2 down. The Fibonacci target
for the wave 3.2 down is 1563". The index reached 1560.3 already on
Monday. This was the end of wave 3.2. Followed by an up reaction wave 2
towards the 50 day average, the upper side of the down moving pitchfork
and the upper side of the small BBS band. On Friday we see the start of a
pullback. I think correction wave 2 is completed and do expect that
wave 3.3 down is started for a move below wave 3.2. The expert is still
black. We still have an open short position.

June 23, 2013

Jun. 23, 2013 (Allthingsforex.com)
– A sequence of notable economic data from the United States will offer
traders an opportunity to assess economic conditions in the world’s
largest economy and to gauge the odds of tapering of the Fed’s monthly
asset purchases.

In preparation for the new trading week, here is a list of the Top 10
spotlight economic events that will move the markets around the globe.

The report could confirm that Germany is gaining momentum with the
business outlook in the euro-zone’s largest economy forecast to be more
optimistic at 106.0 in June, compared with a reading of 105.7 in the
previous month.

A small pullback in consumer confidence could bring the index lower
to 75. 6 in May from 76.2 in April, while the U.S. new home sales are
forecast to increase 462K in May compared with 454K in the previous
month.

The final reading of the U.S. Q1 GDP is expected to show the economy
growing at a faster pace by 2.4% q/a in the first quarter after managing
to avoid contraction and expanding by 0.4% q/a in the final quarter of
last year. The USD could benefit from accelerating U.S. economic growth
report which could raise the odds that the Fed might take the first step
toward monetary policy tightening sooner rather than later.

Following three consecutive quarters of contraction, the U.K.
returned to growth in Q3 2012, only to see its economy contracting again
by 0.3% q/q in the final quarter of last year. Luckily, the economy
averted an unprecedented triple-dip recession and expanded by 0.3% q/q
the first quarter of 2013. The final reading should be in line with the
preliminary estimates and should confirm the 0.3% q/q growth in Q1.
However, if this number is revised lower, the GBP could come under
pressure on expectations of more easing by the Bank of England.

6. EUR- EU Summit, Thurs., Jun. 27, and Fri., Jun. 28, all day event.

EU leaders are due to meet for a special economic summit to discuss
measures to spur growth in the region. With pro- and anti-austerity
views creating divisions between the members of the 27-nation union on
how to get the economy growing, it would not be a surprise to see the
two-day event resulting in a deadlock. The EUR would not be likely to
benefit from another unproductive EU Summit.

7. USD- U.S. Personal Income and Outlays, a
measure of consumer income and spending, released along with the PCE
Price Index- the Fed’s preferred gauge of inflation, Thurs., Jun. 27,
8:30 am, ET.

Consumer spending in the U.S. is forecast to rise by 0.4% m/m in May
after the unexpected 0.2% m/m drop in April. The Fed’s preferred core
PCE Index could show inflation inching slightly higher by 0.1% m/m after
staying flat in the previous month, but not enough to prompt the
Federal Open Markets Committee to make sudden changes to its current
monetary policy.

The massive QE operations of the Bank of Japan could finally begin to
create inflationary pressures. The Japanese national core inflation
gauge is forecast to rise to 0% y/y in May, up from -0.4% y/y in April.
With the index climbing from deflation territory, the report could lend
support to the JPY on expectations that the Bank of Japan might not need
to become even more aggressive with further measures to fight
deflation.

10. USD- U.S. Consumer Sentiment, the University
of Michigan’s monthly survey of 500 households on their financial
conditions and outlook of the economy, Fri., Jun. 28, 9:55 am, ET.

The final reading of the U.S. consumer sentiment index for June is
forecast to be revised higher to 83.1 from a preliminary estimate of
82.7. The report will wrap up what is expected to be a week of decent
U.S. economic data that could boost the USD as the market prices
expectations that the Fed could start reducing its monthly asset
purchases this fall.

June 22, 2013

Last week I wrote:
"Monday brought the index close to the upper side of the
internal BBS band, and as expected the index turned down reaching a low
on Wednesday finding support on the 50 day average. Thursday brought a
large correction back to the Pivot point PP and previous support, now
becoming resistance. But Friday the down move was back closing the week
lower. I assume there will be another attack to break the 50 day average
support the coming week and the low side of the internal BBS band, as a
result creating a wave 3.2 down. ".

Correction wave 2 was finished on Tuesday. Thursday the 50 day average
support was broken as expected. The down move was stopped on Friday
reaching the dynamic support of the 100 day average, the S1 pivot
support and the low side of the BBS volatility band. The expert turned
black on Thursday. We have a valid wave 3.2 down. The Fibonacci target
for the wave 3.2 down is 1563. There may be some reaction before we
reach that point. For the medium term 1500 is the next target. The total closed profit trading the index is 128.3% from the start in March 2009.
We have an open short position.

June 16, 2013

Jun. 16, 2013 (Allthingsforex.com)
– In the week ahead all eyes will focus on the Federal Open Markets
Committee meeting in search for clues of the Fed’s willingness to take
the first step toward monetary policy tightening.

In preparation for the new trading week, here is a list of the Top 10
spotlight economic events that will move the markets around the globe.

Inflationary pressures in the U.K. are forecast to rise to 2.7% y/y
in May from 2.4% y/y in April. A pickup in the level of inflation could
make it more difficult for the Bank of England to ease monetary policy
in upcoming months.

The ZEW index is expected to show a month of improvement with a
reading of 38.0 in June compared with 36.4 in the previous month. The
euro could get a boost from a report that instills optimism that
recovery is underway in the euro-area.

The weekly sequence of U.S. housing market data could start on a high
note with housing starts forecast to increase to 924K in May from 853K
in April. Strong U.S. data should continue to raise the odds of the Fed
tightening monetary policy sooner rather than later.

June 15, 2013

Last week I wrote:
"The index made the expected move towards the support of the 50
day moving average. This was also a 161.8% Fibonacci target, the 50%
retracement of the wave 3.4 up and the low side of the up moving
pitchfork. From that point an up reaction was started on Thursday and
Friday. I do expect this last wave 2 correction to remain a valid wave
2, probably next turning down against the upper side of the internal BBS
band and the median line of the up moving pitchfork. ".

Monday brought the index close to the upper side of the internal BBS
band, and as expected the index turned down reaching a low on Wednesday
finding support on the 50 day average. Thursday brought a large
correction back to the Pivot point PP and previous support, now becoming
resistance. But Friday the down move was back closing the week lower. I
assume there will be another attack to break the 50 day average support
the coming week and the low side of the internal BBS band, as a result
creating a wave 3.2 down. We have an open short position. The expert is still green. I believe
we must expect a continuation of the down move, so I keep the open short
position.

June 9, 2013

Jun. 9, 2013 (Allthingsforex.com)
– The euro will be closely watched during the upcoming week which could
mark a new phase in the euro-area’s debt crisis as the German
Constitutional Court convenes to debate and make a decision on the
legality of the country’s participation in bailout funds and sovereign
debt purchases.

In preparation for the new trading week, here is the outlook for the
Top 10 spotlight economic events that will move the markets around the
globe.

The revised GDP estimate is expected to confirm that the world’s
third-largest economy returned to growth by 0.9% q/q in the first
quarter of 2013 after the flat 0% q/q reading in the final quarter of
last year. The negative JPY trend is still intact, but a long overdue
price correction has gotten underway in the last couple of weeks and the
yen strength could continue if better-than-expected economic data from
Japan reduces expectations of the need for additional easing measures by
the Bank of Japan.

The Bank of Japan will be likely to reaffirm its commitment to
open-ended QE until the 2% inflation target is in sight. Although the
bank is not expected to step up its efforts at this point, it would be
interesting to see if the central bank surprises the market with an
announcement of even more aggressive easing due to the recent rapid rise
of the yen. Should the Bank of Japan choose to sit on the sidelines,
the yen rally could extend further.

The German Constitutional Court will gather for two days of hearings
on the legality of the country’s contribution to bailout funds like the
European Stability Mechanism and the European Central Bank’s OMT
bond-buying program. Some experts have already named it “the most
important risk event” that could lead to a showdown between Germany and
the ECB and could reignite the crisis in the euro-area. In recent years,
the court ruled out an injunction intended to freeze the ESM, but at
the same time tied politicians’ hands by capping Germany’s ESM
contribution at 190 billion euro. Judges blocked the proposal of a bank
license for the ESM, killed off hopes of eurobonds, debt-pooling, or
fiscal union by prohibiting the Parliament from “accepting liability for
decisions by other states”. Although the German high court may not
announce its ruling for several weeks or may even pass the decision
making to the European Court of Justice where an approval would be much
more likely, uncertainty about the outcome of the event could elevate
anxiety levels and could increase the pressure on the euro.

Las week’s series of stronger Services, Construction and
Manufacturing PMIs could be followed by a weaker overall industrial
sector data with industrial production forecast to drop by 0.3% m/m in
April after rising by 1.0% m/m in March.

Jobless claims in the U.K. dropped by 7,300 in March, but are
forecast to register a smaller decline by about 6,800 in April, while
the unemployment rate stays unchanged at 7.8%. A weaker-than-expected
jobs report would increase the odds of more easing by the Bank of
England when the new Governor Carney takes his seat in July and could
trigger a correction of the pound’s recent gains.

After rising by 1.0% m/m in March, industrial activity in the
euro-zone is forecast to stumble with a 0.2% m/m drop in April. The EUR
will not be likely to get a boost from data that fails to instill
optimism that the region’s economy is on a path to recovery.

In a world where competitive currency devaluation has become the
norm, the New Zealand central bank will not be in a hurry to start
tightening monetary policy. The central bank joined “currency wars” in
February with the Governor warning that intervention is being considered
as an option to curb the persistent strength of the New Zealand dollar.
The Kiwi has recently fallen and could weaken further if the Reserve
Bank of New Zealand makes it clear that rates will not rise anytime
soon.

Following April’s strong jobs report which showed 50,100 new jobs
created, the Australian economy is expected to lose 9,800 jobs in May,
while the unemployment rate inches higher to 5.6% from 5.5%. A weak
employment report could raise the odds of a rate cut by the Reserve Bank
of Australia and could weigh on the Australian dollar.

9. USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Thurs., Jun. 13, 8:30 am, ET.
Consumer spending in the U.S. is expected to recover from the
disappointing 0.2% m/m drop in April with an increase by 0.3% m/m in
May.

10. USD- U.S. Consumer Sentiment, the University
of Michigan’s monthly survey of 500 households on their financial
conditions and outlook of the economy, Fri., Jun. 14, 9:55 am, ET.

The preliminary estimate of the U.S. consumer sentiment index is
forecast to show further improvement with a reading of 84.9 in June from
the four-year high of 84.5 in the previous month. Following the decent
Non-Farm Payrolls report last Friday, stronger U.S. economic data in
the week ahead could boost the US dollar on expectations that the Fed
might begin the “tapering” of its asset purchases in upcoming months.

Last week I wrote:
"It looks like as I mentioned last week "Until Thursday it
looked like the week would be closed with a higher price. But, my
expectation of a further move down was confirmed on Friday, closing the
week lower at the level of the 61.8% Fibonacci retracement with a large
black candle. The index is now making a first wave 3.1 down. There may
be some up reaction, but short term I do expect a further move down
towards the 50 day moving average and the low side of the BBS volatility
channel. The expert turned black and indicators are moving down. We
still have our open short position".

The index made the expected move towards the support of the 50 day
moving average. This was also a 161.8% Fibonacci target, the 50%
retracement of the wave 3.4 up and the low side of the up moving
pitchfork. From that point an up reaction was started on Thursday and
Friday. I do expect this last wave 2 correction to remain a valid wave
2, probably next turning down against the upper side of the internal BBS
band and the median line of the up moving pitchfork. The total closed profit trading the index is 128.3% from the start in March 2009.
We have an open short position. The expert went from black to
green. I believe we must expect a further move down, so I keep the open
short position.

June 2, 2013

Jun. 2, 2013 (Allthingsforex.com)
– Three monetary policy announcements by major central banks and the
U.S. Non-Farm Payrolls report will make for an intriguing week ahead as
traders watch the next move by European Central Bank and gauge the odds
of “tapering” of the Fed’s asset purchases based on the condition of the
U.S. labor market.

In preparation for the new trading week, here is the outlook for the
Top 10 spotlight economic events that will move the markets around the
globe.

Although the index is expected to bounce a bit higher, the chronic
contraction in the euro-zone manufacturing sector is likely to continue
for another month. The revised estimate of the Manufacturing Purchasing
Managers Index is forecast to show a reading of 47.8 in May, compared
with 46.7 in April.

With its largest trading partner slowing, the mining boom peaking and
the “two-speed” Australian economy underperforming, the Reserve Bank of
Australia could be forced to announce another rate cut following the 25
bps reduction in May. The Aussie dollar has fallen significantly since
the last meeting and could stay under the pressure if the central bank
lowers the benchmark rate to 2.5% and warns about the negative effects
of persistent currency strength.

The final reading is expected to be in line with the preliminary
estimate which showed activity in the euro-zone services sector inching
higher to 47.5 in May from 47.0 in April. Despite of the anticipated
increase, the index will remain below the 50 boom/bust line for yet
another month of contraction.

In the first quarter of the year, the euro-zone economy was unable to
return to growth and the revised estimate is forecast to confirm that
the economy contracted by 0.2% q/q, prolonging the recession for a third
consecutive quarter. With no end to its recessionary period and not
much optimism that the economy might be turning a corner in the near
future, the EUR could be pushed lower on expectations of additional
easing by the European Central Bank.

6. USD- U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., Jun. 5, 8:15 am, ET.

Following the unexpected decline to 119K in April, the U.S. private
sector is forecast to pick up the pace of job creation with up to 170K
jobs added in May.

The hopes that the latest weak retail sales report automatically
means more easing by the Bank of England may prove to be misguided,
especially if the U.K. manufacturing and services PMI reports throughout
the week signal that activity is picking up. Granted, the drop in
consumer spending is not to be taken lightly, but it will take more bad
data before the Monetary Policy Committee decides to increase the size
of the Asset Purchase Program. For the time being, the U.K. economy has
comfortably managed to avoid an unprecedented triple dip recession in
Q1, the new Governor Mark Carney is to take his seat on July 1, and
there is simply no urgency for the Bank of England policy makers to do
anything in June, except to maintain the status quo. It will then be up
to Mr. Carney to steer monetary policy depending on the state of the
U.K. economy. Until the Bank of England rejoins the QE party, the pound
should remain as a viable alternative to currencies whose central banks
are committed to aggressive monetary policy easing.

Despite of some recent signs that conditions in Germany may be
improving, the 17-nation euro-zone is struggling with record high
unemployment and economic growth is still nowhere to be seen. This is
why it would not be a surprise to see the European Central Bank
resorting to additional unconventional monetary policy easing measures
that could be announced as early as the June meeting. Expectations that
the ECB will continue to look for ways to spur economic growth with
further easing could serve as a catalyst to push the euro further into
the $1.20′s.

Job creation in the U.S. could keep the momentum going with the
economy adding up to 180K jobs in May compared with 165K in April, while
the unemployment rate stays unchanged at 7.5%. A strong NFP report
could boost the USD on expectations that the Fed might be one step
closer to reducing the size of its monthly asset purchases.

Last week I wrote: "It looks like as I mentioned last week "I believe the reaction will probably start within the next couple of weeks'", that at least the index made a good start for the down move the past week. Wednesday there was a large black candle creating a bearish harami candle pattern. The large candle was already a confirmation of the pattern. But, also Thursday and Friday we got lower closing prices. The index found support on the R2 monthly pivot level and the median line of the up moving pitchfork. Indicators are moving down. Next down targets are the 50% retracement of the last wave up at 1611 with the R1 pivot close by, followed by the support of the 3.3 wave top at 1597. I expect a further move down. We have an open short position. Monday US markets will be closed for Memorial Day'".

Until Thursday it looked like the week would be closed with a higher price. But, my expectation of a further move down was confirmed on Friday, closing the week lower at the level of the 61.8% Fibonacci retracement with a large black candle. The index is now making a first wave 3.1 down. There may be some up reaction, but short term I do expect a further move down towards the 50 day moving average and the low side of the BBS volatility channel. The expert turned black and indicators are moving down. We still have our open short position. The total closed profit trading the index is 128.3% from the start in March 2009. We have an open short position. The expert is still green.